Africa

🇧🇫 Burkina Faso’s interim military leader Ibrahim Traore said his administration is considering acquiring arms from North Korea and reiterated that Russia is an important ally of his government. In a rare interview with the state broadcaster aired on May 4, Traore said Burkina Faso’s army still uses weapons from North Korea obtained in 1985 and that they had a new found cooperation after reopening diplomatic relations in March. He said it could see Burkina Faso acquire more arms for its counteroffensive against Jihadist insurgents. Quizzed on the presence of Wagner, the Russian private military contractor, Traore insisted that his army is fighting alone without help from any foreign forces. He said that the claims of Wagner’s presence there are being stirred “to tell certain states to abandon Burkina.”

🇳🇬 A $19 billion oil refinery built by billionaire Aliko Dangote’s company will be commissioned by outgoing Nigerian President Muhammadu Buhari on May 22, a week before he is due to leave office. The refinery has the capacity to produce 650,000 barrels of oil per day. The country, which is the biggest oil producer on the continent, sees the project as a solution to ending a dependence on imports for nearly all of its refined petroleum products.

🇸🇳 Senegalese opposition leader Ousmane Sonko was on Monday (May 8) sentenced on appeal to a six-month suspended prison sentence and fined 200 million CFA francs ($330,300) in a ruling which throws his 2024 presidential bid into doubt. Sonko was sentenced in absentia — as he had announced that he would no longer appear before the court — for allegedly defaming the tourism minister Mame Mbaye Niang. Sonko is also facing trial later this month for alleged “rape and death threats” in a complaint filed by a beauty salon worker.

🌍 The East African Community Regional Force (EACRF) and the Southern Africa Development Cooperation (SADC) standby force will work hand in hand to support efforts to fight armed terrorists in eastern DR Congo. A SADC summit backed the deployment of forces “to restore peace and security in eastern DRC.”

The number of mayors Johannesburg has elected within the last four years, the most recent being Kabelo Gwamanda, who was elected last week. He ran on the platform of the Al Jama-ah party, a minority in South Africa’s wealthiest city’s council but was supported by the African National Congress, and the Economic Freedom Fighters. Gwamanda is the new twist in a politically unstable Johannesburg where shaky coalitions have seen many mayors traded as quickly as interests have changed. The ANC and EFF, two of South Africa’s leading parties, are jostling for alliances ahead of the quest to control parliament in the 2024 general elections.

Zimbabwe’s gold-backed digital tokens run into political headwinds

THE NEWS

HARARE, Zimbabwe — Zimbabwe launched gold-backed virtual coins as a central bank digital currency (CBDC) on Monday in its latest bid to fight currency volatility and contain spiraling inflation.

The token, Africa’s second CBDC after Nigeria introduced the eNaira in 2022, comes amid rampaging inflation, estimated at more than 70% in April, and a collapsing Zimbabwe dollar, which has lost half its value against the U.S. dollar in the past fortnight.

President Emerson Mnangagwa’s government is trying to bolster confidence in the local currency, while his main rival in this year’s election, Nelson Chamisa of the Citizens Coalition for Change (CCC) party, has called instead for the full adoption of the United States dollar. Many local companies and traders already use the US dollar for key transactions.

Tendai Biti, former Finance Minister of Zimbabwe and a leader with Chamisa’s CCC, said that the central bank’s “attempt to introduce gold backed digital currency is bad economics in a country without any significant reserves” of gold.

Zimbabwe’s digital tokens can be held in either e-gold wallets or e-gold cards, according to the Reserve Bank of Zimbabwe, and can be used for normal daily transactions or person-to-person exchange.

KNOW MORE

Zimbabwe has been trying to solve its hyperinflation and monetary issues through a myriad of currency experiments that have largely failed over the last 20 years.

In 2003, Zimbabwe introduced bearer cheques before unveiling special agro-cheques with denominations of up to 100 trillion Zimbabwean dollars. In 2009, Zimbabwean authorities adopted the U.S. dollar as legal tender, bringing some stability to the economy. But when President Mnangagwa dislodged Robert Mugabe from power in 2017, he banned the use of foreign currencies for transactions and reintroduced the Zimbabwean dollar in 2019. The ban was short-lived as Zimbabwe subsequently endorsed a multiple currency basket of legal tender a few months later.

TAWANDA’S VIEW

Zimbabwe is trying to gain public trust by linking the digital currency to physical gold reserves. But economists argue that Zimbabwe’s government is itself fueling excess liquidity and inflation by printing money to pay off government contractors for infrastructure development.

They say the digital gold coins will only work if their introduction is matched with focused efforts by the government to target economic fundamentals.

“The efficacy of new tokens will be determined by the market confidence in the issuing authority and related institutions,” Chiedza Madzima, head of Africa research at Fitch Solutions told me. “Adding new currency layers will not solve the fundamental monetary policy issues at play and will do little to quell the underlying drivers of inflation.”

Trust is the critical factor, Kin Mungai, Senior Research Analyst at the Center for Financial Regulation and Inclusion (Cenfri) told me. “Issues to do with corruption and smuggling of gold may undermine public trust in the new tokens so it is important to address that as well as other underlying issues.”

In any case, the U.S. dollar is now dominant as a means of payment in Zimbabwe, according to listed companies financial reports.

ROOM FOR DISAGREEMENT

Emmanuel Mathe, an independent Bulawayo-based crypto currency analyst, said the gold token approach is a “good initiative as per their intended use to be a store of value.” But he added that “a lot of ground work needs to be done regarding the implementation and the infrastructure” which will determine the market’s confidence. “There needs to be a robust proof of reserve system that authenticates the availability of gold backing the digital currency.”

THE VIEW FROM SAN FRANCISCO

Jonathan Dharmapalan, CEO of CBDC technology firm eCurrency, agreed with Zimbabwe’s strategy saying other central banks could opt to “issue a gold-backed CBDC to further reinforce trust” in a digital currency. “This could be an enhancement and an interesting feature of digital currency that does not typically apply to other forms of currency.”

NOTABLE

• How Zimbabwe hit a new level of dysfunction with its currency woes. It’s clear Zimbabweans don’t trust their local currency and as there isn’t enough U.S. cash to make change, vendors have been issuing their own on scraps of paper.

Lydiah Bosire says the mission of 8B Educational Investments is to enable “African brilliance to have a global impact” by financing higher education for African students at scale. Bosire, who is Kenyan, founded the company in 2017.

Caafisom is a startup trying to revolutionize healthcare provision in Somaliland despite the odds stacked against it in a market without a major tech hub or a leading health system and in a country that isn’t recognized by most other states.

Co-founded by local entrepreneur Mohamed Ismail Ahmed, Caafisom provides software and logistics services for hospitals to digitize patients’ health records. The startup is now running its system in over 30 hospitals across the country including Hargeisa Neurology Hospital and Needle Hospital in the capital city of Hargeisa, according to Ahmed. He said the company has digitized 1.5 million patient records (around 20% of the population), in both public and private hospitals, and plans to expand the business to Ethiopia.

“The only uphill task we encountered was convincing the hospitals to change the way they work,” Ahmed said.

In March, U.S. venture capital firm, Tofino Capital, made a $100,000 seed-stage investment in Caafisom. Investing in Somaliland, which broke away from Somalia and declared its independence in 1991, was not straightforward. “We had to kind of reinvent the venture process to get this deal done,” said Eliot Pence, Tofino’s co-founder.

Despite Somaliland’s de facto statehood it has some support in the U.S. Congress. Senators Jim Risch and Chris Van Hollen, among others, have actively supported U.S. engagement with Somaliland.

— Muchira Gachenge

U.S. debates sanctions for Sudan’s warring generals

➞ What’s happening? The U.S. government is deliberating whether to target the finances of Sudan’s two feuding generals — Abdel Fattah al-Burhan and Mohamed Hamdan Dagalo, aka Hemedti — in a bid to pressure them into abiding by a ceasefire and preventing the North African country from sliding further into civil war.

➞ Is the timing important? These U.S. discussions come as representatives from their two warring factions — the Sudanese Armed Forces (SAF) and the Rapid Support Forces (RSF) militia — are meeting in Saudi Arabia to find ways to allow humanitarian aid into the country.

➞ Ah, so the details of a long-term ceasefire will be hammered out in Jeddah? Burhan and Hemedti have both said so far that the talks aren’t about a ceasefire to end the fighting that’s raged for almost a month and left as many as 1,000 Sudanese dead and seen many thousands flee to cities including Jeddah.

➞ Last week President Biden signed an executive order to sanction “individuals” involved in Sudan’s troubles. Isn’t that enough? It’s a clear “warning” to both generals, said a U.S. official involved in sanctions policy.

➞ How might U.S. sanctions affect the generals? The SAF and RSF control hundreds of businesses in Sudan that touch on every sector of the economy, from banking and agribusiness to transportation, according to U.S. officials and outside analysts. General Hemedti and his family also own numerous gold mines in Sudan’s Darfur region.

➞ Will the U.S. be able to successfully sanction Burhan and Hemedti? The United Arab Emirates and Saudi Arabia have the most financial leverage over the generals. Both men are believed to have substantial assets in those countries, and it’s unclear if Abu Dhabi and Riyadh will agree to pressure their military allies.

— Jay Solomon, Semafor Security editor

🟡 Read the full story with Jay’s view here and sign up here for our twice weekly Security newsletter.

A new Prince of Naples

Nigerian footballer Victor Osimhen scored the decisive goal on May 4 that helped Napoli win the highest prize in Italian football, earning the southern club’s first league title since Diego Maradona spearheaded a triumph three decades ago.

With that goal, Osimhen, 24, has become the highest-scoring African football player in Italy’s top league, overtaking the 46-goal haul accumulated by current Liberian president George Weah in the mid-90s. With murals alongside Diego Maradona on the streets of Naples, the star striker is the subject of interest from storied clubs in Germany, England, and Spain.

Bids will almost certainly eclipse the €70 million Napoli paid French club LOSC Lille for Osimhen’s services in July 2020, possibly making him Africa’s first €100 million football player.

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— Yinka, Alexis, Marché Arends, Alexander Onukwue, and Muchira Gachenge